Making Venezuelas economy scream

Chilean counter-revolutionaries used human suffering as a tool to bring down President Salvador Allende in 1973. Something similar may be going on in Venezuela now.

A Caracas reporter surveying food stores recently found shelves to be mostly empty. His March 2 story focused on the Mercals, government retail units selling low-cost food at subsidized prices. Shopper Beatriz Zambrano complained, “There’s no milk, sugar, rice or chicken.”

Venezuela’s Central Bank has documented a recent two-thirds rise in food prices for the poor, with chicken prices up 110 percent since January, and cheese, 245 percent. The government sees hoarding, holding back on deliveries, and price speculation as part of a campaign to stir up discontent.

Venezuelan agricultural production, at 6 percent of the GDP, is Latin America’s lowest. Over 85 percent of Venezuelans live in cities and large towns and 70 percent of Venezuela’s food is imported. Agribusiness dominates domestic food production. As a result, food availability rests largely in the hands of distributors and retailers, who are “maximizing their profits,” according to María Cristina Iglesias, Minister of Light Industry and Commerce Distributors.

Citing laws and regulations aimed at keeping prices low, Information Minister William Lara accused the private firms of hoarding. “Speculators are criminals and enemies of the people, who must feel the law, firmly applied,” he declared. Government inspectors have been pressuring food stores accused of manipulating food supplies and raising prices.

The crisis came to a head when big stores stopped selling meat. President Chavez responded, “I have sent messages to producers and intermediaries … that if they persist in violating the people’s interests, the constitution, the laws, I am going to take away their refrigeration facilities, supply depots, and meat processing places and nationalize them.” He asked for local monitoring and suggested that the new community councils would end up operating nationalized facilities.

Government spokespersons cite Venezuela’s constitution, which holds food production to be a public utility, as authority for nationalizing food distribution resources. As a manifestation of “good will,” the government removed a 14 percent value-added tax on sales of certain food products.

On Feb. 27, Chavez outlined plans to spend $2.5 million to expand Mercal’s infrastructure, and $129.3 million to keep up Mercal food stocks. “We are going to build new Mercals and keep on expanding the network,” he declared. Over 14,000 Mercal facilities now sell low-cost food throughout Venezuela.

Promising that “we aren’t going back even a millimeter,” Vice President Jorge Rodríguez announced Feb. 11 the creation of “committees for social control of supplies” administered by the communities. The purpose, he said, was “to build a country without speculators, without hoarding, without business sector strikes.”

He was recalling the strike and sabotage campaign directed against the Chavez government in early 2003 that turned off Venezuela’s oil industry, leading to widespread suffering. Analysts see interference with food availability as another in a series of schemes devised by a desperate minority. They included abandonment of the National Assembly in 2005, plots accompanying past elections, and the coup attempt of April 2002.